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• How experts reacted to Fed's big cut?

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  Amarendra Dhiraj    Group moderator

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  How experts reacted to Fed's big cut?

  The US Federal Reserve has slashed both the Federal fund rates and discount rates by 50 basis points each, seeking to prevent a steep housing slump and turbulent financial markets from triggering a recession. The Fed cut the benchmark interest rate to 4.75 percent from 5.25%.
  
  This is the first cut in four years. Discount rates were lowered to 5.25%.
  
  Most institutions have reacted positively to this cut. According to Morgan Stanley the Fed move will benefit Asian equities and currencies. The risk appetite for India will also turn positive.
  
  CSFB believes the markets may latch on to the risk of recession in the US. CSFB also sees equities becoming cheap on a 6 month horizon and may see a year-end rally.
  
  While, CLSA said that markets will rally, but the cut points to a bigger problem in the US. The Fed has just confirmed the chances of a recession by this cut.
  
  JP Morgan is of the view that the Fed decision will help restore investor confidence. Emerging markets will see a short-term rally and upside ill be capped. They also the see another 50 bps rate cut by the year-end.
  
  • 19 Sep 2007, 10:17 am
  Amarendra Dhiraj wrote: > The US Federal Reserve has slashed both the Federal fund rates and > discount rates by 50 basis points each, seeking to prevent a steep > housing slump and turbulent financial markets from triggering a > recession. The Fed cut the benchmark interest rate to 4.75 percent > from 5.25%. > > This is the first cut in four years. Discount rates were lowered to > 5.25%. > > Most institutions have reacted positively to this cut. According to > Morgan Stanley the Fed move will benefit Asian equities and > currencies. The risk appetite for India will also turn positive. > > CSFB believes the markets may latch on to the risk of recession in > the US. CSFB also sees equities becoming cheap on a 6 month horizon > and may see a year-end rally. > > While, CLSA said that markets will rally, but the cut points to a > bigger problem in the US. The Fed has just confirmed the chances of a > recession by this cut. > > JP Morgan is of the view that the Fed decision will help restore > investor confidence. Emerging markets will see a short-term rally and > upside ill be capped. They also the see another 50 bps rate cut by > the year-end.